Orin Boyd (Steven Seagal) is a cop in Detroit's 21st precinct, who saves the Vice President of the United States (Christopher Lawford) from a right-wing Michigan militant group trying to kill him. As Boyd saved the Vice President's life by disobeying orders and killing all the militants, Captain Frank Daniels (Bruce McGill), who is also a long-time friend of Boyd, is forced to fire Boyd, but still tells him to talk with police chief Hinges (Bill Duke) who dislikes Boyd (because Boyd makes a bad name to the police for disobeying orders) and has repeatedly tried to fire him, only for Boyd to be returned to duty by his friends in the trade union. Despite Boyd once again being returned to duty, Hinges transfers Boyd to the 15th precinct — Detroit's arguably worst police precinct.

Boyd's new captain, former internal affairs officer Annette Mulcahy (Jill Hennessy), knows of his reputation, and she tells him that she will not tolerate it. Annette sends Boyd to an anger management class, where he meets Henry Wayne (Tom Arnold), the high-strung host of a local talk show called Detroit AM. While driving, Boyd comes across local drug dealer Latrell Walker (Earl "DMX" Simmons) and his fast-talking sidekick T.K. Johnson (Anthony Anderson) doing a shady deal with a man named Matt Montini (David Vadim). After a brief fight, Walker and Johnson escape, while Boyd arrests Montini and discovers to his surprise that Montini is a cop and has been working undercover trying to nail Walker and Boyd just ruined the sting, which does not sit well with Montini's musclebound partner Useldinger (Matthew G. Taylor).

Sergeant Lewis Strutt (Michael Jai White) — one of the most decent and respected cops from the precinct — steps in to cool things down when Boyd gets in a fight with Useldinger. After Boyd stumbles upon the theft of $5,000,000 worth of heroin from evidence storage, Boyd and his new partner George Clark (Isaiah Washington) begin focusing their efforts on Walker and T.K. Intrigued by what little they have on Walker, they investigate why he has been visiting Shaun Rollins (Mel Jason "Drag-On" Smalls). Henry discovers that Walker is not a drug dealer; instead he is a computer expert and billionaire whose real name is Leon Rollins — he is Shaun Rollins' brother.

While driving, Boyd is suddenly hit by a van and is captured by Montini, Useldinger and fellow cop/accomplice Fitz (Shane Daly). While they are driving, Montini takes out a syringe, filled with lethal poison and tries to kill Boyd. Boyd, however struggles with Montini and causes him to inject the poison in the van driver's neck, killing him. After Boyd beats up Montini and Useldinger, Fitz tries to shoot Boyd, however Boyd kicks Fitz to the edge of the van, causing him to get crushed by another car, killing him as well. Montini and Usedinger manage to jump out of the van and Boyd himself manages to escape as well before the van crashes.

Angered because of the attempt on his life, Orin confronts Leon, who explains that a group of corrupt cops needed a fall guy for a deal gone bad and pinned it on Shaun. It is further revealed that Strutt himself is the leader of the group, which includes Montini, Useldinger and formerly Fitz. Leon and his friend Trish (Eva Mendes) have been videotaping the activities of Strutt's gang, hoping that it might help prove Shaun's innocence and get him out of jail.

Boyd meets Mulcahy at a parking lot to inform her what he has uncovered. However, Montini, Useldinger, and some other corrupt cops who were sent by Strutt try to kill Boyd and Annette. Mulcahy is killed in the chase and Boyd escapes. Boyd calls Frank and tells him that Strutt, Montini and Useldinger will be having a meeting at a warehouse, in about an hour, to sell the stolen heroin. Strutt plans to sell it to Leon and T. K., not knowing that Leon is working against him. Frank promises that he will be there with some backup.

Boyd and Daniels show up, however with no backup as Frank did not know who to trust. They enter the warehouse just in time as the deal goes sour because of Leon bringing only half of the money as insurance and Strutt revealing that he knows about Leon's true identity. Although Boyd and Frank confront the group, Strutt isn't moved and calmly tells Frank to keep Boyd under control and Boyd realizes that it is Frank who is behind everything. Frank reveals that the reason he became corrupt was because he felt that his annual 40,000 dollar salary wasn't enough because he risked his life everyday and he is about to shoot Boyd (to prove to a taunting Strutt that the entire operation is his) when Clark blows open the door and barges in with backup, including some non-corrupt cops and Hinges and a shootout ensues.

During the gunfight, Boyd is shot in the back (but survives due to wearing a bulletproof vest) by Useldinger, who is about to finish off Boyd, but George comes just in the nick of time and shoots Useldinger, killing him. Frank unsuccessfully tries to escape and Hinges shoots him four times with a shotgun, killing him. After taking out most of the corrupt cops, Boyd decides to go after Strutt, while Leon decides to go after Montini. However, Boyd reaches Strutt and the two fight with cloth guillotines, after which Strutt grabs Leon's case full of money and runs up to the roof, where a helicopter is waiting for him. As the helicopter is taking off with Strutt hanging on to the ladder, Boyd manages to hook the bottom of it onto a metal pipe protruding from the roof. This causes the ladder to break and Strutt falling from the helicopter and landing onto another metal pipe that impales Strutt, killing him. Leon finds Montini and the two start a brutal fight. Montini gets the upper hand in his fight with Leon, after he damages Leon's vision with clothing dye powder. However, Leon eventually wins the fight after he stabs Montini in the leg with a knife and impales Montini in the neck with a spike on a weight rack, killing him.

At dawn, Leon gives Hinges the videotape that proves the corruption, hoping that the tape will help prove Shaun's innocence. Hinges thinks that the courts will not care about the tape, so Hinges had Shaun released from county about an hour before. Boyd decides to stay with the 15th precinct with George as his partner, and T. K. becomes Henry's television co-host.

Stuntman Chris Lamon died of head injuries on August 23, 2000, six days after a stunt went wrong on the Exit Wounds set in Hamilton, Ontario. A van was being towed along a street upside-down as part of a chase scene; he was supposed to roll safely out, but apparently struck his head. Another stuntman suffered a concussion in the same incident.[6]

Exit Wounds debuted at No.1 at the box office, grossing $19 million at North American theaters from Friday through Sunday.[7] It was considered a surprise hit movie, as it grossed over $50 million in America and almost $30 million throughout the rest of the world.

It was hailed as Seagal's big "comeback"[8] but critical reception was mixed to negative.[9] Critics praised the film's action scenes and stunt work, however they criticized the film's location errors, clichéd script, poor acting and dialogue. It currently holds a 32% rating out of 65 reviews on the review aggregate website Rotten Tomatoes,[10] with the critical consensus "It probably goes without saying that Exit Wounds is loaded with plotholes and bad dialogue. Critics also note that Seagal has aged rather badly."